According to a poll from last December, only 45% of Americans understand how tariffs work. Which makes sense, considering how these taxes on imports from other countries (often passed on to consumers) have not been deployed as a major component of U.S. economic policy in recent decades.
But as a primary instrument of the current presidential administration, tariffs now command significant attention in global politics, corporate board rooms, and investment banks.
At the Institution for Social and Policy Studies, the renewed interest offered an opportunity to harness the university’s expertise and embrace its educational mission through a short course for faculty to brush up on the concept and learn what the latest research reveals.
“I think it’s fair to say tariffs were a relatively sleepy instrument of American economic and foreign policy for many decades,” said ISPS Director Alan Gerber, Sterling Professor of Political Science. “We saw a need where members of the faculty interested in public policy and political economy could explore how recent scholarship in the area might provide an informed understanding of what’s going on today. Fortunately, Yale is blessed with an extraordinary group of trade scholars who agreed to deliver lectures on various aspects of this important topic.”
ISPS’s five-week course included classes by Amit Khandelwal, Dong-Soo Hahn Professor of Global Affairs and Economics, on how tariffs work; Giovanni Maggi, Howard H. Leach Professor of Economics and International Affairs, on how tariffs affect consumer welfare; Sam Kortum, department chair and James Burrows Moffatt Professor of Economics, on using a canonical quantitative trade model to assess the impact of tariffs; and Lorenzo Caliendo, Won Park Hahn Professor of Global Affairs and Management and professor of economics, on how to enrich models so they might account for multiple sectors, intermediate goods, trade imbalances, and costly labor mobility.
Last year, ISPS sponsored a similar course about the underlying mechanics of large language models, taught by Kyle Jensen, Shanna and Eric Bass ’05 Director of Entrepreneurial Programs, associate dean of Yale School of Management, and professor in the practice of entrepreneurship.
“It’s extraordinarily generous,” Gerber said. “My colleagues are very busy. They took time to prepare materials and deliver outstanding lectures to the group.”
At a panel discussion with a Q&A session to culminate the course on trade last month, participants covered short-run adjustment costs and wage stickiness, empirical evidence showing that tariffs do not significantly reduce unemployment even in the medium term, how tariffs cause a one-time price level increase but not sustained inflation, how the long-run effects of tariffs on growth and innovation remain uncertain, how global supply chains complicate the capacity for tariffs to incentivize foreign direct investment, the academic consensus that there is little support for tariffs as a tool to preserve manufacturing jobs except for national security concerns, and how tariffs have geographically uneven effects due to industry specialization.
“These are subjects that extremely accomplished researchers have been focused on for many years,” Gerber said. “The philosophy behind this series is: Let’s find out what the academic literature says about complicated topics of current importance. Before you can have an idea of whether tariffs are too high, too low, or just right, we should know more about how these topics are analyzed and the key research findings.”
